Small Valley Milling

Building Successful Microenterprises
Using Locally Grown Grains:
C A S E S T U DY: S M A L L VA L L E Y M I L L I N G
Small Valley Milling
The evolution of a grain-processing facility on a family farm
GrowNYC and the Organic Growers’ Research and Information-Sharing Network (OGRIN)
collaborated to create research-based case studies that share best practices of regional grain
producing and processing enterprises with entrepreneurs who seek to join this growing economy.
This case study was made possible with funding from the United States Department of Agriculture
Rural Development’s Rural Microentrepreneur Assistance Program. To read additional case
studies, visit grownyc.org/grains and ogrin.org.
www.grownyc.org/grains
www.ogrin.org
Photos: J. Russell/GrowNYC.
Winter 2015
Photo: J. Russell/GrowNYC
Above Eric Steigman
climbing a grain storage bin.
Cover Small Valley Milling’s
dehulling and milling
facility outside Harrisburg,
Pennsylvania.
Among the pioneers who are recreating a viable food grain system in the Northeast
is the Steigman family. Joel and Elaine Steigman and their son Eric, who grow grain
crops on 350 acres in central Pennsylvania, have over the last 15 years built Small
Valley Milling into a dehulling and flour milling facility that markets to bakeries,
food stores and food processors throughout the Northeast. Their experience
and insights provide practical guidance for those starting up grain processing
businesses. Their story also exemplifies how on-farm processing can be used to
help Northeastern family farms survive and prosper.
T H E S T EI G M AN FAM I LY FA RM
The Steigman family farm is situated about 25
miles north of Harrisburg, PA, in a locality known as
Small Valley, which has a gentle topography and silt
loam soils suitable for grain production. Since the
1970s, they have been raising crops (predominantly
hay and corn) and livestock on land that has gradually
expanded from 80 to 350 acres. However, for many
years, Joel and Elaine provided the bulk of family
income by working off farm. Joel used his welding and
mechanical skills in a variety of jobs from truck driving
to carpentry to contracting while Elaine worked as a
registered nurse.
When Joel decided to devote himself to farming
full-time in the 1990s, he realized they were going to
have to take a different approach if the farm was to
survive and thrive. Instead of competing in the commodity market, which favors large-scale production,
the Steigmans undertook a series of steps to add value
to their farm products, including converting to organic
production, growing grains with high market potential,
processing the grains on farm, and marketing their
grain products themselves.
This value-added approach required a team effort.
In 2009, after 36 years of nursing, Elaine retired to help
Joel with the farm business. Around that time, their son
Eric, who found his work in “corporate ag” unfulfilling,
came back to the farm to work with his parents.
Case Study: Small Valley Milling
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Photos: S. Blondin/Sheri Blondin Photography
Above left Vigorous spring
T H E S T EI G M AN S’ AP P ROAC H TO A D D IN G VA LU E TO G RA IN S
growth of fall-planted spelt.
Above center An immature
emmer seed head.
Above right Dehulled
emmer.
Converting to organic farming
The Steigmans consider the most critical step in their
quest for sustainability their transition in 1997 to
organic farming. According to Joel, the conversion
to organic has had several benefits: providing a price
premium for their grains and hay; farming in a more
healthful way both for themselves and the environment;
and joining a community of farms, businesses, and
organizations in which information on production and
marketing is readily shared.
Growing high-value specialty crops
In the late 1990s, the Steigmans, who had grown
wheat in the past, switched to spelt as a valued-added
grain. Spelt, which is closely related to common wheat
(they are both subspecies of Triticum aestivum), is in
demand by consumers as a grain that is more easily
digested than common wheat. It also has a distinctive
flavor, which the Steigmans characterize as “sweeter,
nuttier” than wheat. Their customers use spelt flour to
make bread, pasta, crackers, and snack foods like pretzels, and also eat it as a whole cooked grain. Spelt also
has an agronomic advantage: Joel finds winter spelt to
be hardier than winter wheat and less susceptible to
diseases­—thus less risky to raise in the humid growing
conditions in the Northeast. The Steigmans currently
grow between 60 and 80 acres of the spelt variety
Maverick in rotation with hay and corn.
The market for emmer started building when American chefs discovered its distinctive flavor when prepared as a cooked grain or as pasta. Often referred to
as farro, emmer also has market appeal as an “ancient”
grain. Domesticated around 10,000 years ago, it is a
precursor of both common and durum wheat. Because
emmer is typically planted in the spring, in contrast to
fall-planted spelt, the Steigmans saw it as an opportunity to diversify and strengthen the farm’s rotation. By
2013, the Steigmans had expanded emmer production
to 30 acres. They grow Lucille, a variety of emmer
developed from landraces brought to the Northern
Plains region by German and Russian emigrants in the
late nineteenth century.
Contracting with growers
The Steigmans soon discovered the market for spelt
was greater than their capacity to produce it and began
to buy grain from other organic farmers. To keep quality high and maintain a consistent product, they source
seed of the Maverick variety for growers and provide
them with information on spelt management—from
planting through harvest. They inspect all incoming
spelt seed lots, checking to make sure the grain is
clean and of high quality. They also test for vomitoxin,
a toxic substance that can be present in spelt and
other grains infected by the fungal pathogen Fusarium
graminearum. Currently the Steigmans are working
with 15 farmers to produce spelt. Now that the market
for emmer products is also growing, they are sourcing
additional emmer from one farmer.
Case Study: Small Valley Milling
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Photo: J Russell/GrowNYC
Above The roller mill under
construction.
Developing dehulling capacity
A peculiarity of spelt led directly to one of the Steigmans’ processing enterprises. Spelt, unlike common
wheat, is a hulled grain (as is emmer). With hulled
grains, the kernel does not thresh free of its hull in the
combine. An additional step, involving specialized
equipment, is required to separate the spelt kernel
from its hull, which is essential if spelt is to be used for
human consumption. Dehulling enterprises are rare in
the U.S., and were nonexistent in their region when the
Steigmans began growing spelt. Instead of shipping
their spelt to the Midwest (where the closest available
facility was located) to be dehulled, the Steigmans set
up their own dehulling facility in 2001.
The Steigmans started going to farm sales and auctions in search of dehulling equipment. About 90% of
their equipment has been purchased at going-out-ofbusiness sales. For example, they picked up several key
pieces of equipment, including a Roskamp oat dehuller
and a destoner, at the auction following the close of the
grain-processing facility of the original Walnut Acres
company. Additional critical components of their dehulling system include a vintage wooden air-screen grain
cleaner (to clean debris from the spelt before it enters
the dehuller), an aspirator (which uses an airstream to
separate the light, empty hulls from the heavier grain
as these materials exit the dehuller), and a paddy table
(used to separate dehulled grain from that which is still
in the hull). Both the cleaner and the paddy table were
purchased as used equipment.
The family also built a structure to hold the dehulling operation, relying primarily on their own labor and
welding and construction skills. The original building
footprint was 1,200 square feet with ceilings as high as
23 feet. (Later a second story and an additional structure were built to accommodate the milling facility and
other upgrades.)
Once the processing operation was up and running,
the business steadily grew. After dehulling with the Roskamp dehuller for six years, the Steigmans upgraded to
a Codema impact dehuller—one of the few new pieces
of equipment they’ve purchased. The Codema increased
their dehulling capacity from about 500 to 3,000 pounds
of grain per hour. (They still recommend the Roskamp
dehuller for small-scale, general-purpose use.) They
now dehull approximately 30,000 bushels of grain a year.
Case Study: Small Valley Milling
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roller mill. Facing a capital investment this large and an
engineering project this complex, they decided to work
with an engineer rather than design it themselves, as
they had the dehulling facility. They again purchased
mainly used equipment to assemble the roller mill,
substantially reducing costs. For example, they bought
four used Allis-Chalmers roll stands—which cost
around $100,000 each new—for a total of $32,000.
In the final stage of mill construction, the Steigmans hired outside help, primarily for the complex
electrical work needed. The facility was built with
three-phase wiring and a 220-volt feed. For the scale
of equipment that they are using, this leads to greater energy efficiency. They honed their roller-milling
skills with the help of a retired miller who used to
be employed at one of the now-defunct, large-scale
mills in their region.
Small Valley Milling began production and sale
of whole and white spelt and emmer flour in 2013.
They still use their Lee mill for orders of whole wheat
and rye flour that are 200 pounds or less. This gives
them flexibility with their customers, allowing them to
produce small orders with a quick turnaround, as well
as larger orders that are shipped out by the pallet load.
Elaine says for customers who want to try small bags
of 5 to 20 pounds, she can grind and ship the flour to
them in two days.
Photos: J Russell/GrowNYC
Below, clockwise from left
Joel Steigman with the
Codema impact dehuller;
the impact mechanism; grain
from the dehuller before
aspiration and separation.
Milling: From stone milling to roller milling
The Steigmans began milling flour in 2001, the same
year they purchased a Lee 12-inch stone mill from
the Walnut Acres auction. They had been producing
small batches of whole stone-ground flour but noticed
a growing demand for white spelt flour. White flour is
made with a roller mill rather than a stone mill, because
roller milling produces a better extraction rate of white
flour from the grain and results in fewer large particles.
The rising demand was driven by bakeries seeking
white flour for making bread, pastries and crackers,
and to a large extent by customers in New York and
New Jersey who wanted white spelt flour to make
matzoh for the kosher market.
It was an opportunity the Steigmans would not let
pass. Lacking their own roller mill, they outsourced the
processing to a nearby mill, which milled and packaged
their white spelt flour with the Small Valley Milling label.
The arrangement worked well for 13 years, a crucial time
of market growth during which they built the Small Valley
brand. Eventually the Steigmans couldn’t justify the cost
and time of hauling grain to the mill and then returning to
pick up the flour. After closely examining the numbers,
Eric confirmed they would save time and money by setting up a roller mill and milling their own grains.
In 2005, the Steigmans began building and assembling the infrastructure and equipment needed for a
Case Study: Small Valley Milling
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Photos: J. Russell/GrowNYC
The Steigmans continue to closely monitor farm
journals and websites for used grain equipment. Despite how far they have come, Joel says there is always
more that can be done.
Above top Joel Steigman
with his daughter, selling
Small Valley products at a
trade show.
Above bottom Joel and
Elaine Steigman handing
out Small Valley samples
at the 2012 Pennsylvania
Association for Sustainable
Agriculture Conference.
Acquiring other essential equipment for grain
processing
The Steigmans purchased a Perten grain quality analyzer to conduct NIRS (Near Infrared Spectroscopy)
tests on protein, ash and moisture content. The NIRS
data allows them to monitor the consistency and quality of their products. Other pieces of equipment were
installed for safety and to improve quality. Dust collection is an important investment as scale increases.
Eric fabricated rare earth magnets to collect metal at
various points in the process. Purchased from a commercial source, the magnets retail for approximately
$4,000. Custom fabricated, they cost about $1,000. As
the business has grown, the Steigmans have added
grain bins as needed. They now have 10 storage bins
with a total capacity of 30,000 bushels of grain, and
recently bought an 11th bin that can hold an additional
30,000 bushels.
Marketing strategy
Small Valley’s business model relies on moving large
volumes wholesale; their only retail outlet is their
website and an occasional pop-up stand at conferences and other events. About 95 percent of their
products are sold wholesale—both directly to large
customers such as bakeries, millers and other food
processors, and through distributors who deliver to
supermarkets, food coops, buying clubs, and CSAs.
The Steigmans have also worked with rabbis to
sell to the kosher market. Some of these customers
package and sell the Steigmans’ spelt and emmer
products under their own brands.
The Steigmans say they prefer to market directly,
rather than through distributors, to avoid price markups to consumers and to capture the full value of their
products. Additionally, they worry about loss of control
over product quality since whole grains, and especially
whole flour, have limited shelf life.
Through smallvalleymilling.com, customers can buy
spelt and emmer berries, or spelt and emmer flour, in
bags of 2, 5, 25 or 50 pounds. Retail pricing includes the
costs of organic production, processing, and packaging,
and reflects the value consumers place on spelt and emmer as rare specialty grains. Current retail prices can be
found on the Small Valley Milling website.
The Steigmans find customers through diverse means,
but a primary strategy has been to cultivate the connections they’ve made as long-time farmers and members of
the organic/sustainable community. They collaborate extensively with state and regional educational and research
organizations, presenting at field days, workshops, and
consumer preference tastings. Through these channels
they not only disseminate information on organic production and grain processing, but they gain exposure for their
business and products. They also exhibit at food fairs,
festivals, and expos geared towards businesses and consumers interested in health foods, specialty products and
local foods. In addition to the website, which has earned
them customers within and beyond the Northeast region,
Elaine Steigman maintains an active Facebook page filled
with spelt and emmer recipes.
Case Study: Small Valley Milling
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Photos: J Russell/GrowNYC (left); S. Blondin/Sheri Blondin Photography
Above left Two of the four
Allis-Chalmers roll stands.
Above right White spelt
flour.
K EY FAC TOR S I N T H E EN TE RP RIS E ’ S S U CCE S S
As with any enterprise, there are multiple reasons
for the successful development of Small Valley Milling,
including the Steigmans’ work ethic and drive. However, certain factors appear to have been critical in the
development of their business:
• Well-balanced skills and strong working
relationships among family members The
family works as a team, each contributing unique
strengths. Joel has an affinity for mechanics and
construction; Eric has a mind for numbers and is
also very skilled at mechanics and construction;
Elaine focuses on the packaging, marketing, quality control, and customer service.
• A sound, diversified farming system Their
rotation is based on an orchard grass/alfalfa hay crop
that helps maintain soil fertility, reduces the risk of
disease, helps suppress weeds—and is sold as a cash
crop. Corn and beef cattle production further diversify
the farm’s products and contribute to farm income.
• Low-input specialty crops The Steigmans have
chosen specialty grain crops, spelt and emmer, which
require fewer inputs than wheat or corn, thus decreasing production costs and increasing profitability.
• Low start-up and development costs The
Steigmans have kept development costs low by
doing the bulk of needed infrastructure construction
themselves, buying used equipment, and reconditioning and adapting that equipment as needed.
• A step-wise approach to enterprise development The family has grown their business in
stages, which has allowed them to self-finance much
of their enterprise development. Once the dehulling
facility was up and running, they had product to sell.
They then plowed the revenue back into construction
and assembly of the mill.
• Off-farm sources used to meet demand and
capture markets as needed Buying from other
growers has allowed them to keep pace with demand
for spelt without overburdening their rotation. Moreover, the Steigmans didn’t wait to start selling flour
until their mill facility was completed. By contracting out the milling of their grain and selling flour
under their label, the Steigmans developed a strong
customer base among bakers and food processors.
That customer base then gave them the funds and
incentive to build their own mill. In every instance
of outsourcing the family maintains full control over
production quality.
• Filling a market niche The Steigmans developed
the first, and so far only, commercial-scale dehulling
operation in Pennsylvania, allowing them to capture
a significant portion of the growing market for spelt
and emmer products in the Northeast.
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ADVI C E F ROM T H E S T EI G M A N S O N D E V E LO P IN G A G RA IN - P RO CE S S IN G E N TE RP RIS E
Emphasize quality
When the Steigmans discuss their operation, a recurring theme is the importance of product quality. They
have added value to their products in multiple ways:
by growing organically, raising specialty crops that
appeal to health- and taste-conscious consumers, and
processing and marketing these crops themselves. Eric
Steigman stresses that all this value can be lost—and
the market for locally/regionally grown grain severely
damaged—if they don’t maintain high quality at every
step, from planting and harvesting the grain through
storage, grain cleaning and processing. This is why the
Steigmans do the following:
• Source high-quality seed to plant despite its expense.
• Prioritize farming (rather than processing and marketing) during the growing season to ensure timely
field operations.
• Practice strict hygiene and use nontoxic, organic
pest control measures to maintain good storage
conditions.
• Ensure clean, sound product by sending grain
through multiple pieces of cleaning equipment,
including an air-screen cleaner, aspirator, separator,
and magnets.
Below Spelt ready for harvest.
The Steigmans have also begun experimenting with
methods of preserving product quality even after it has
left their facility, e.g., through vacuum packaging and
the use of inert gas in packaging.
Be prepared to invest time and capital
The Steigmans point out that a commitment to high
quality requires “skin in the game”—an investment
in good farming practices, equipment, and infrastructure—whatever the scale of the enterprise. Those
without a farm background who want to raise and
process grain will need to get experience in grain
farming before entering the market. Commercial grain
production will require some level of mechanization, at minimum adequate seeding, harvesting, and
cleaning equipment. Infrastructure, including storage
and processing facilities, will need to be located and
refurbished or built from scratch, keeping in mind state
and federal regulations. Buying used rather than new
equipment saves money, but such equipment takes time
and effort to source and usually must be repaired or
adapted before it can do the job required.
The Steigmans believe great opportunities exist for
on-farm grain processing enterprises, but they stress
that it is hard work—and requires a financial commitment—to get such an enterprise up and running, make
it profitable, and provide consumers with consistently
high-quality products. Elaine also strongly advises
creating long-term goals and growth projections at the
initial stage of business development, explaining that
the Steigmans’ somewhat unplanned and improvised
development has now put them in a difficult position of
having to reconcile their faster-than-expected growth
with their goals and present capacity.
Photo: J Russell/GrowNYC.
S M A L L VA L L E Y M IL L IN G A S A M O D EL FO R
O N - FA RM G RA IN P RO CE S S IN G
The Steigmans are modest about their success.
Joel, Elaine, and Eric wryly recall mistakes made and
point out the many years it has taken for them to get
where they are today. They also stress that the scale at
which they are working and high degree of mechanization they use will not be suited to everyone. Nevertheless, the Steigmans’ adherence to sound farming
practices, “do-it-ourselves” approach, incremental
development of their enterprise, and commitment
to product quality are principles that can help guide
Northeastern farmers in developing successful grainprocessing enterprises.
Case Study: Small Valley Milling
8
Small Valley Milling
Start-up Costs*
The Steigmans built their
dehulling and milling facility
gradually over a period of
20 years, for an estimated
total of $550,000—a fraction of what it would have
cost had they not done much
of the design, construction
and equipment maintenance
themselves. To capture the
different phases of business
development, the costs are
divided into $150,000 for
the dehulling operation and
$400,000 for the milling facility. The costs include new and
used equipment, electrical
installation, consultation from
a milling engineer, and building construction.
• Dehulling
- Total: $150,000
• Initial small-scale investment: $15,000-$30,000
• Subsequent large-scale
investment: $135,000
• Milling
-Total: $400,000
• Initial small-scale
investment in stone mill:
$15,000
• Subsequent large-scale
investment in roller mill:
$385,000
Equipment & Costs*
• Dehulling
- Initial investment
• Oat dehuller (Roskamp):
$5,000 used
• Aspirator: $5,000 used
• Air-screen cleaner: $300
- Upgrade to greater
dehulling capacity
• Impact dehuller
(Codema): $20,000 new
• Aspirator: $6,000$16,000 used, depending
on condition and features
• Paddy table: $15,000
used
• Milling
- Initial investment in stone
mill
• 12-inch Lee stone mill:
$15,300 used
• Box sifter: $1,000 used
– Upgrade to roller mill
• 4 Allis-Chalmers roll
stands: $32,000 used
• Sifter: $35,000 used
• Pneumatic belt system
for moving the grain:
$100,000
• Additional Equipment
- Total: $50,000
• Perten Grain
Analyzing equipment
• Bagging machine
• Weigh scales
• Label Maker
• Custom magnets for
cleaning
• Storage bins
Products
• Organic Emmer Flour
• Organic Emmer Kernels
• Organic Pastry Flour
• Organic Spelt Kernels
• Organic White Spelt Flour
• Organic Whole Spelt Flour
• Organic Whole Wheat Flour
• Organic Purple Corn Kernels
Utilities
• Type: Three-phase with a
220-volt feed
• Usage: 6,500-7,000 kWh
monthly
Prices
See smallvalleymilling.com
Licenses
• Registered as a food processor
with the Federal Food and Drug
Administration
• Registered as a food processor
with the Pennsylvania Dept. of
Agriculture.
• Certified Organic with
Pennsylvania Certified Organic
Production Volume
2013:
• De-hulling 30,000 bushels of
grain per year.
• Roller milling 22,500
bushels per year
• Stone milling 7,500 bushels
per year
Buildings
• Main facility:
- Original structure 1,120
square feet with ceiling
heights ranging from 17 to
23 feet.
- Building additions to accommodate roller mill and other
upgrades, started in 2011
• Two-story structure: lower level of 1,320 square
feet and upper level of
1,000 square feet, each
with 17-foot ceilings.
• Additional 100 square
feet for office and testing
lab.
• Storage: 11 bins with total
capacity of 60,000 bushels of
grain.
Photo: S. Blondin/Sheri Blondin Photography
Facts and Figures
Staff
• 3 full-time
• 1 part-time
Insurance
$25,000 annually for farm, truck,
house, mill, liability
Markets Accessed
• Wholesale, direct to customer,
approx. 95% of sales:
-Bakeries
- Other millers
- Other food processors
- Kosher market for
matzoh
• Wholesale, through
distributors
-Bakeries
- Food co-ops
- Buying clubs
-CSAs
• Online retail sales direct to
customer
*All figures are estimates due to price fluctuations for new and used equipment. In addition, equipment must comply with OSHA guidelines, found at osha.gov,
and current food safety regulations, which were under revision at the time of publication and can be found at fda.gov.
For more resources, please visit ogrin.org and grownyc.org/grains.
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GrowNYC is a hands-on environmental nonprofit
whose goal is to help you make New York City the most
sustainable and livable city in the world. More gardens,
greenmarkets, more recycling, and education for all.
A GrowNYC initiative, the Greenmarket Regional
Grains Project fosters a thriving regional grain
economy within the local food system, beginning with
our network of growers and customers and
extending to any farmer, entrepreneur or retailer
contributing to its growth throughout the Northeast. The Organic Growers’ Research and
Information-Sharing Network (OGRIN) generates
practical information for organic farmers
and gardeners through farmer participatory research,
review articles and fact sheets on issues critical
to organic farming, and by providing forums
for information-exchange between growers.
Visit ogrin.org to learn more.
Visit grownyc.org/grains to learn more.
This project made possible by funding from the
USDA Rural Development Microentrepreneur Assistance Program.
Case Study Series Building Successful Microenterprises Using Locally Grown Grains
Authors Elizabeth Dyck, OGRIN, and June Russell, GrowNYC;
Additional research & editing by Heidi Dolnick, GrowNYC;
Design by Annemieke Beemster Leverenz
Initial Interview Date August 9, 2012